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An agreement was signed with MBB (Germany) in July 1984 to support design, development and production of an Advanced Light Helicopter (ALH), design starting in November 1984. Ground test vehicle runs began in April 1991.

Five flying prototypes (two basic, one air force/army, one naval and one civil) were built.

PT1 first civil prototype (Z3182) rolled out 29 June 1992; first flight 20 August and 'official' first flight 30 August 1992

PT2 second civil prototype (Z3183) made its first flight 18 April 1993

PT-A (army/air force prototype Z3268) on 28 May 1994

PT-N (naval prototype), with CTS 800 engines and a retractable tricycle undercarriage, flew for first time (IN901) on 23 December 1995

Total hours flown, including 'hot-and-high' trials in environments of 45°C and more than 6,000m, were about 1,500. Military certification of air force/army, naval and coast guard versions was completed in March 2002.

Civil: Roles to include passenger and utility transport, commuter/offshore executive, rescue/emergency medical service and law enforcement. Wheel landing gear. Prototype targeted to fly in 2001, but this not achieved until 6 March 2002; DGCA certification to be followed by FAA/JAA type approval. Civil version entered production in 2003. Launch customer Azal India Helicopter (one ordered 5 February 2003, for delivery later that year).

Flying controls are integrated dynamic management by four-axis AFCS (actuators have manual as well as AFCS input); constant-speed rpm control, assisted by collective anticipator (part of FADEC and stability augmentation system acting through ATCS).

Landing gear is non-retractable metal skid gear standard for air force/army version. Hydraulically retractable tricycle gear on naval and civil versions, with twin nosewheels and single mainwheels, latter retracting into fairings on fuselage sides which also (on naval version) house flotation gear and batteries; rearward-retracting nose unit; naval version has harpoon decklock system. Spring skid under rear of tailboom on all versions, to protect tail rotor. FPT Industries (UK) Kevlar inflatable flotation bags for prototypes, usable with both skid and wheel gear.

The first three, and fifth, prototypes each powered by two Turbomeca TM 333-2B2 or -2C turboshafts, with FADEC, rated at 740kW for T-O, 783kW maximum contingency and 666kW maximum continuous. LHTEC CTS 800-4H (998 kW) selected late 1994 and test-flown in the fourth prototype, but subsequently embargoed; all then went to TM 333-2B2 until availability of 895kW class Ardiden 1H (Shakti) in about 2006. The twin turboshafts are mounted above the cabin.

Total usable fuel, in self-sealing crashworthy underfloor tanks (three main and two supply), 1,400 litres. Pressure refuelling in naval version. Crossfeed and fuel dump systems in all military versions.

Flight crew of two, on crashworthy seats in military/naval versions. Main cabin seats 12 persons as standard, 14 in high-density configuration. EMS interior (first flown by PT2/Z3183 in January 2001) can accommodate two stretchers and four medical attendants, or four stretchers and two medical personnel. Crew door and rearward-sliding door (military) or hinged door (civil) on each side; clamshell cargo doors at rear of passenger cabin.

DC electrical power is from two independent subsystems, each with a 6kW starter/generator, with battery back-up for 15 minutes of emergency operation; AC power, also from two independent subsystems, each with a 5/10 kVA alternator. Three hydraulic systems (pressure 207 bar, maximum flow rate 25 litres/min; systems 1 and 2 for main and tail rotor flight control actuators, system 3 for landing gear, wheel brakes, decklock harpoon, rescue hoist (naval variant) and optional equipment. Oxygen system.

Armament is cabin-side pylons for two torpedoes/depth charges or four anti-ship missiles on naval variant; on army/air force variant, stub-wings which can be fitted with eight anti-tank guided missiles, four pods of 68mm or 70mm rockets or two pairs of air-to-air missiles. Army/air force variant can also be equipped with ventral 20mm gun turret or sling for carnage of land mines. Cabin-mounted 7.62mm machine gun in Coast Guard version, firing from starboard side doorway.

Naval trials by PT-N conducted in March 1998 aboard aircraft carrier INS Viraat and smaller decks of other Indian Navy vessels. May 1998 US trade embargo, imposed following India's refusal to sign nuclear test ban treaty, blocked import of CTS 800 engines (30 ordered) and delayed planned first flight of PTC-2 civil fifth prototype (VT-XLH) with this engine until 6 March 2002. Instead, all variants were to be powered by TM 333, including retrofit of PT-N prototype; contract announced 7 February 2003 for HAL to co-develop and co-produce Turbomeca Ardiden 1H (Indian name Shakti) for future, higher-powered versions of Dhruv. Weight reduction programme initiated in mid-1998; RFPs issued later same year for cockpit display system. By the end of 1998, manufacture was well advanced of three preproduction aircraft (PPN-1, PPA-2 and PPA-3: one for each of the three armed services).

Indian government requirement for armed forces and Coast Guard, to replace Chetaks/Cheetahs; letter of intent for 300 (Army 110, Air Force 150, Navy/Coast Guard 40) followed by contract for 100 in late 1996, but allocation revised by 2001 as Army 120, Navy 120, Air Force 60 and Coast Guard seven; all to be delivered by 2015. Second production lot contains 20.

Deliveries (four each to Indian Air Force and Army, two each to Navy and Coast Guard) were due to begin in late end of 2001, to be followed by two each to Coast Guard, Navy and Air Force by the end of March 2002. Seven deliveries actually achieved by this date: Army two (IA-1101 and -1103) starting 20 March 2002, Air Force two (J-4041/4042 on 20 March), Navy two (IN-701 /702 on 28 March) and Coast Guard (CG-851 on 18 March) one. However, Army's IA-1102 had been delivered for trials use earlier, on 4 January 2003. Eight more scheduled for delivery by 31 March 2003, of which Indian Navy received two on 24 March. Initial batch of 30 TM 333-2B2 engines ordered in mid-1999 to power first 12 (including two civil) production Dhruvs; all then intended for delivery by 2002. Further 52 engines ordered mid-2000 to power next 20; deliveries of these almost completed by February 2003; further contract at that time for over 300 more, for delivery from early 2004. Hindustan Aeronautics showed the ALH / Dhruv (Polaris) at the 2003 Paris Air Show. Unit price of basic aircraft approximately Rs250 million (US$5.1 million) (2002). Total programme costs US$170 million by 1997.

Initial Indian Army aircraft were delivered to 201 Squadron.

Development and marketing agreement between HAL and Israel Aircraft Industries announced in late 2002; involves both Dhruv and LAH derivative; IAI to concentrate on avionics and other internal systems.